Jobs crisis looms as George Osborne gets set for cuts

12 April 2012

The scale of the jobs crisis facing the Government was laid bare today, despite a slight fall in unemployment.

Official figures showed unemployment drifted back below 2.5 million in April while the number of people on the dole dropped to under 1.5 million for the first time in more than a year.

But long-term unemployment rose again and the number of people deemed economically inactive rose to a record 8.19 million, a staggering 21.5% of the working-age population.

City economists warned the fall in unemployment could be short lived as Chancellor George Osborne takes the axe to Government spending and slashes jobs in the public sector.

Vicky Redwood of Capital Economics said: "The UK jobs market is showing some signs of further improvement, but the fiscal squeeze could soon bring this to a halt.

"It won't be long before the looming public-sector job cuts start.

"With private-sector hiring likely to stay weak, we still think that unemployment has significantly further to rise, perhaps all the way to three million over the next two or three years."

The Office for National Statistics said unemployment fell from 2.51 million at the end of March to 2.47 million at the end of April, or 7.9% of the workforce.

That still left the jobless total 23,000 higher than at the end of January, 192,000 higher than it was 12 months ago, and up by some 800,000 since the start of the recession in early 2008.

The UK's unemployment rate compares with 10.1% in the eurozone, 9.7% in the US and 5.1% in Japan.

The claimant count, or number of people collecting Jobseeker's Allowance, decreased by 30,900 in May to 1.48 million, the first time it has been below 1.5 million since March last year.

With less than a week to go to the emergency Budget, the figures also showed:

The number of people in work rose by 5,000 to 28.86 million;

Full-time employment fell by 56,000 while the number of part-time workers rose by 61,000:

There are now 1.08 million working part-time because they cannot find full-time jobs, the highest level since 1992;

Long-term unemployment — the number out of work for more than a year — rose by 85,000 to a 13-year high of 772,000;

The inactivity rate, which includes students and the long-term sick, hit a record high of 8.19 million.

Many observers fear there will be a "jobless recovery" in the UK as firms make part-time workers full-time rather than hire new staff.

Andrew Goodwin, senior economic adviser to the Ernst & Young Item Club, said: "Increasing numbers of workers are being forced into part-time work because they cannot find a full-time job. Looking forward it is difficult to see the unemployment rate coming down very quickly, with little sign that growth in the private sector will be able to offset the impact of public-sector cuts."

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